Common use of Asset Allocation Strategies Clause in Contracts

Asset Allocation Strategies. The Asset Allocation strategies encompass risk-based allocations designed to adjust exposures to asset classes based upon expected economic conditions in both the U.S. and globally over a forecast period consisting of a rolling three-year outlook. These strategies are aligned across the spectrum of risk profiles and represent risk tolerances for the investment life stages of accumulation, protection, and distribution. In recognition of the fact that economies move through cycles, Confluence designs its Asset Allocation strategies to attempt to manage risk through changing economic conditions. This process is supported by seminal academic work from 1952 stating that expected risk and returns should be used as the capital market assumptions that underlie an effective asset allocation program. Accordingly, Confluence uses a rolling three-year time frame as its forecast period to seek to address opportunities and associated risks and incorporate flexible allocations that are modified each quarter to reflect appropriate exposures as expectations of macroeconomic factors and market conditions change. Macroeconomic factors may include issues related to inflation, economic growth, Fed policy, currency trends, commodity prices, quantitative easing or tightening, the regulatory environment, trade policies, budget deficits, and national debt as well as foreign central bank policies, global inflation, and foreign economic growth rates. Market condition evaluations may involve the outlook for the Fed’s overnight target rate, SOFR and other money-market rates, the shape of the yield curve, credit underwriting trends, corporate default rates, corporate bond spreads, corporate profitability, equity valuations, U.S. dollar exchange rates, capital flows, and fundamental factors affecting commodities. Each quarter, and in rare instances more frequently should macroeconomic factors and market conditions dictate, Confluence’s Asset Allocation Committee (“AAC”) convenes to review, study, and align the strategies in accordance with the AAC’s updated forecasts given the then-current economic environment and outlook. The AAC uses its internally generated capital market assumptions for each asset class to optimize each strategy within the combination of each strategy’s distinct and strict risk budget and, where appropriate, yield governor to construct the allocations to 12 asset classes. Within the asset classes, the AAC examines each strategy for the appropriate ETFs to utilize to seek the optimal risk-adjusted outcome given the AAC’s assessment of economic and market factors. Beyond the quarterly examinations and any resultant changes, the AAC regularly monitors the strategies relative to expectations and market conditions intra-quarter. All strategies are comprised primarily of ETFs. The core of the strategies typically uses ETFs that mimic the performance of the desired index for each asset class utilized. The strategies that include an element of income can hold a material portion of their bond exposures in target maturity ETFs in the form of bond ladders. These vary in length and duration according to the respective strategy. Tax- exempt versions of the strategies with income as an element use ETFs consisting of municipal bonds for their fixed income allocations. Where appropriate, specialized ETFs are incorporated to overweight or underweight particular elements. These can be in the form of sectors, industries, and/or factors for U.S. equity exposures, regions, countries, and/or sectors for international equity exposures, and duration, sector, and/or target maturity and target duration ETFs for bond exposures. In each instance where specialized ETFs are employed, the AAC seeks to ensure that they are in accordance with the desired positioning for the forecasted economic environment and assist in either enhancing opportunities or reducing risk. There are five risk-based strategies including Aggressive Growth, Growth, Growth & Income, Income with Growth, and Income, with the latter three having tax-exempt income versions available. In addition, there are currently five Target Date strategies: Target Date 2025, Target Date 2030, Target Date 2035, Target Date 2040 and Target Date 2045. As the accompanying graphic depicts, each Target Date strategy mirrors a risk-based strategy and will shift its allocation every five years to the adjacent risk-based strategy in a succession of increasingly conservative steps. The final shift to mirroring the risk-based Income strategy will occur in the same year as the name of the Target Date strategy. 2025 Income Income with Growth Growth & Income Growth Aggressive Growth 2026 Income Income with Growth Growth & Income Growth Aggressive Growth 2027 Income Income with Growth Growth & Income Growth Aggressive Growth 2028 Income Income with Growth Growth & Income Growth Aggressive Growth 2029 Income Income with Growth Growth & Income Growth Aggressive Growth 2030 Income Income Income with Growth Growth & Income Growth 2031 Income Income Income with Growth Growth & Income Growth 2032 Income Income Income with Growth Growth & Income Growth 2033 Income Income Income with Growth Growth & Income Growth 2034 Income Income Income with Growth Growth & Income Growth 2035 Income Income Income Income with Growth Growth & Income 2036 Income Income Income Income with Growth Growth & Income 2037 Income Income Income Income with Growth Growth & Income 2038 Income Income Income Income with Growth Growth & Income 2039 Income Income Income Income with Growth Growth & Income 2040 Income Income Income Income Income with Growth 2041 Income Income Income Income Income with Growth 2042 Income Income Income Income Income with Growth 2043 Income Income Income Income Income with Growth 2044 Income Income Income Income Income with Growth 2045 Income Income Income Income Income

Asset Allocation Strategies. The Asset Allocation strategies encompass risk-based allocations designed to adjust exposures to asset classes based upon expected economic conditions in both the U.S. and globally over a forecast period consisting of a rolling three-year outlook. These strategies are aligned across the spectrum of risk profiles and represent risk tolerances for the investment life stages of accumulation, protection, and distribution. In recognition of the fact that economies move through cycles, Confluence designs its Asset Allocation strategies to attempt to manage risk through changing economic conditions. This process is supported by seminal academic work from 1952 stating that expected risk and returns should be used as the capital market assumptions that underlie an effective asset allocation program. Accordingly, Confluence uses a rolling three-year time frame as its forecast period to seek to address opportunities and associated risks and incorporate flexible allocations that are modified each quarter to reflect appropriate exposures as expectations of macroeconomic factors and market conditions change. Macroeconomic factors may include issues related to inflation, economic growth, Fed policy, currency trends, commodity prices, quantitative easing or tightening, the regulatory environment, trade policies, budget deficits, and national debt as well as foreign central bank policies, global inflation, and foreign economic growth rates. Market condition evaluations may involve the outlook for the Fed’s overnight target rate, LIBOR, SOFR and other money-market rates, the shape of the yield curve, credit underwriting trends, corporate default rates, corporate bond spreads, corporate profitability, equity valuations, U.S. dollar exchange rates, capital flows, and fundamental factors affecting commodities. Each quarter, and in rare instances more frequently frequently, should macroeconomic factors and market conditions dictate, Confluence’s Asset Allocation Committee (“AAC”) convenes to review, study, and align the strategies in accordance with the AAC’s updated forecasts given the then-current economic environment and outlook. The AAC uses its internally generated capital market assumptions for each asset class to optimize each strategy within the combination of each strategy’s distinct and strict risk budget and, where appropriate, yield governor to construct the allocations to 12 asset classes. Within the asset classes, the AAC examines each strategy for the appropriate ETFs to utilize to seek the optimal risk-adjusted outcome given the AAC’s assessment of economic and market factors. Beyond the quarterly examinations and any resultant changes, the AAC regularly monitors the strategies relative to expectations and market conditions intra-quarter. All strategies are comprised primarily of ETFs. The core of the strategies typically uses ETFs that mimic the performance of the desired index for each asset class utilized. The strategies that include an element of income can hold a material portion of their bond exposures in target maturity ETFs in the form of bond ladders. These vary in length and duration according to the respective strategy. Tax- Tax-exempt versions of the strategies with income as an element use ETFs consisting of municipal bonds for their fixed income allocations. Where appropriate, specialized ETFs are incorporated to overweight or underweight particular elements. These can be in the form of sectors, industries, and/or factors for U.S. equity exposures, regions, countries, and/or sectors for international equity exposures, and duration, sector, and/or target maturity and target duration ETFs for bond exposures. In each instance where specialized ETFs are employed, the AAC seeks to ensure that they are in accordance with the desired positioning for the forecasted economic environment and assist in either enhancing opportunities or reducing risk. There are five risk-based strategies including Aggressive Growth, Growth, Growth & Income, Income with Growth, and Income, with the latter three having tax-exempt income versions available. In addition, there are currently five four Target Date strategies: Target Date 2025, Target Date 2030, Target Date 2035, Target Date 2040 and Target Date 20452040. As the accompanying graphic depicts, each Target Date strategy mirrors a risk-based strategy and will shift its allocation every five years to the adjacent risk-based strategy in a succession of increasingly conservative steps. The final shift to mirroring the risk-based Income strategy will occur in the same year as the name of the Target Date strategy. Calendar Year Confluence AA Target Date 2025 Income Income with Growth Growth & Income Growth Aggressive Growth 2026 Income Income with Growth Growth & Income Growth Aggressive Growth 2027 Income Income with Growth Growth & Income Growth Aggressive Growth 2028 Income Income with Growth Growth & Income Growth Aggressive Growth 2029 Income Income with Growth Growth & Income Growth Aggressive Growth Confluence AA Target Date 2030 Income Income Income with Growth Growth & Income Growth 2031 Income Income Income with Growth Growth & Income Growth 2032 Income Income Income with Growth Growth & Income Growth 2033 Income Income Income with Growth Growth & Income Growth 2034 Income Income Income with Growth Growth & Income Growth Confluence AA Target Date 2035 Income Income Income Income with Growth Growth & Income 2036 Income Income Income Income with Growth Growth & Income 2037 Income Income Income Income with Growth Growth & Income 2038 Income Income Income Income with Growth Growth & Income 2039 Income Income Income Income with Growth Growth & Income 2040 Income Income Income Income Income with Growth 2041 Income Income Income Income Income with Growth 2042 Income Income Income Income Income with Growth 2043 Income Income Income Income Income with Growth 2044 Income Income Income Income Income with Growth 2045 Income Income Income Income IncomeConfluence AA Target Date 2040